BNZ Forecasts RBNZ Rate Hikes to Resume in September

BNZ, one of New Zealand's largest banks, has predicted that the Reserve Bank of New Zealand (RBNZ) may restart interest-rate hikes as early as September. According to BNZ, this would involve a 25-basis-point increase in the cash rate to 2.75%. The bank argued that the RBNZ still leans towards tightening and markets are not fully pricing in how many moves could come soon.

Currently, traders are pricing just one 25-basis-point hike, expected to land either in October or December. However, BNZ expects hikes at both meetings after September, which would have significant implications for borrowing costs. When investors anticipate a higher path for the cash rate, short-term interest-rate swaps tend to reprice first.

This can feed through into advertised fixed-rate mortgages ahead of the RBNZ's decision. For households rolling off short-dated fixed deals, this raises the odds that refix rates stay elevated or even edge higher into the October-December window.